Law Administration

Law offices are like any other business. Their balance sheets must remain in the black and not the red. The source of income for law firms are quite obvious as attorneys are reputed to be expensive for their services. However, law office expenses may influence the billing process in providing legal services. Law office expenses are collectively known as overhead.

Overhead consists of office administration expenses such as paying rent, staff, paralegals, equipment, reference, and promotion. Large law firms have the capital to hire accountants. However, small law offices may keep their books themselves or delegate that responsibility to a trusted paralegal. Office expenses are directly correlated to the overall cost of legal services.

Since office expenses play a large role in determining the cost of services, law offices devise strategies to reduce costs and manipulate their budgets in such a manner to eventually turn a profit. Most law offices in America are not mega firms; they are small to mid-size law firms. Office expenses vary according to geographic region and market forces.

The average office expenses for promotion is $7,135 annually. The average office expense pertaining to reference resources and database subscriptions is $4,655 per year. Staff and paralegals are usually the most costly office expense at $73, 058. Rent and occupancy costs average at about $26,500 a year. Other miscellaneous costs range from $30 to $40 thousand.

Paralegals can help reduce office expenses in discussing with manage if there are any databases that are inefficient or unused. Paralegal feedback to management is indispensable to reducing costs that drive the profit incentive and maintain the solvency of the law firm. Unfortunately, paralegals and staff may also be cut if a law office is not doing well financially.

This is primarily because staff and paralegals are among the most costly of legal office expenses. However, paralegal job security is rather firm given the training. Paralegals make good money given the extent of their training the invaluable role they play in the administration of legal services. On average an individual paralegal makes about $40,000 a year. The hours are long and the work is difficult but not many other individual’s with associates degrees make that much more. Associates degrees yield a mean of about $35,000 a year.

Due to the need to be competitive within the legal services market, there is a whole industry that helps businesses reduce costs with logistical solutions. The information technologies industry has helped law offices reduce their expenses to be more competitive with the larger firms.

Many prominent law firms also own the office they occupy instead of renting because the commercial real estate could be leveraged as an asset. This business maneuver can reduce office expenses. The objective for private law firms is to turn a profit and be more competitive against the many law firms in a given market.

Lawyers charge for their services in many different ways. Law firms, big and small, must generate income in order to maintain the viability of their businesses. Usually, the manner in which lawyers charge for their service is in the base-plus- fee format.base prices for legal services are either charged at a flat rate or hourly rate. Flat rates and hourly rates apply to all legal services that range from legal advice to litigation. Lawyers may even charge hourly rates or flat rates for drafting legal documents for a client. Hourly rates are more common than flat rates. Hourly rates range from $50/hr to $1,000/hr. Hourly rates are calculated based on the amount of time a lawyer spends on a client’s case or the time elapsed between the initiation of legal services until the conclusion of the client’s case.

Many lawyers are willing to charge competitive flat rates for their services. Flat rates are not calculated in proportion to time. Flat rates are a one time charge for legal services.

Legal Services Fees

Lawyers also charge fees, in addition to their base price. The most common fee in legal services involving litigation is the contingency fee. Contingency fees directly apply to the outcome of a civil or criminal trial. The fees are usually applicable to outcomes of trials that are favorable to the advocate’s client. Contingency fees are most often based on a percentage of the winnings or cost of legal remedy.

Contingency fees may also be arbitrarily derived but the percentage scheme is considered the fairest form of charging fees for legal services. Client’s are not obligated to pay contingency fees if the outcome of the trial does not yield any legal recovery.

Retainer fees are yet another common fee attorneys charge their clients. Retainer fees are like a down payment on the lawyer’s services. The idea behind charging a retainer fee is to solidify the relationship between the advocate and his or her client. Clients are more likely to return for a lawyer’s services if they have already invested money; the client’s investment solidifies the obligatory bond between the lawyer and the client.

Factors Contributing to the Cost of Legal Services

Geographic location

As in most services industries, cost of services depend on the typical price of a market. Prices depend on the location of the lawyer’s office. Typically, urban lawyers charge more than their rural counterparts. Price depends on what a given market would allow. Prices are somewhat based on competition

Reputation

Lawyer’s who are experienced in a particular field of law or are famous in their field, generally charge more for their services.

Case Difficulty

No two cases are the same and vary in difficulty. More time is generally spent on more difficult cases, so lawyers charge accordingly.

Overhead

This is the main factor explaining why urban lawyers charge more than rural lawyers. Lawyers have to pay rent too, real estate, and utility costs are generally higher in cities than they are in the countryside.

Preferred Client Discount

Lawyers are businessmen as well as legal representatives. Clients that display loyalty to a lawyer by giving referrals and returning for future legal services can lead to discounted costs.

Law offices, generally small firms and single attorney offices, make their livings on hourly rates for their legal services. Lawyers are known for their massive workloads. They may be handling multiple cases at one time. Keeping track of time is a difficult task. Therefore, it is partly the job of paralegals to help the attorney keep track of the time they spend on each client. Many lawyers have difficulty keeping track of the billable time associated with a client’s case. Billable time includes the time it takes an attorney to do legal research in preparation for legal motion. Lawyers call this period “discovery

Today, most law offices account for their billable time with computer software. Time tracking software is more accurate in doing the math and keeping track of time; however, accuracy is contingent upon the law offices input. Legal secretaries and paralegals are generally responsible for keeping track of billable time involved in a particular client’s case.

Time tracking software promotes transparency in the law office’s billing practices because it keeps a written record of the time a lawyer spends on a case. Since the atmosphere of a law office can be quite hectic, lawyer’s offices, average only account for about 67% of the total billable time. Lawyers are busy people, who are constantly on the run. They prioritize serving the interests of their clients.

They should spend the bulk of their time serving clients, not spending productive time worrying about tracking time. Therefore, paralegals and legal secretaries turn the clock on and off when an attorney shifts from one case to another case, if the attorney is bold enough to take on multiple cases at a time. Keeping track of time is a crucial task to keeping a lawyers’ office running, this responsibility is entrusted to trained professionals that do the bulk of the administrative work of the law office.

Most law offices use time tracking software that relays time tracking from multiple computers to a central computer. The central computer is the administrative computer that verifies the input of the other computers on the network. This way, time is kept in an organized and methodical manner.

Client trust accounts involve any private legal practice that handles clients’ money. Client trust accounts ensure that clients’ money is not subject to seizure from law offices’ creditors or personal financial problems of a lawyer. Client trust accounts are a insurance guarantee that clients money will not be taken prior to the conclusion of the clients’ legal issue.

Since private law offices are at the mercy of banks if their loans become delinquent, their accounts can be garnished. Sometimes, a lawyer’s personal bank account can be garnished if the individual happens to have personal financial problems. It can be difficult to distinguish between a client’s money or the law firm’s money.

Therefore, Client trust accounts create the distinction between client money and the corporate accounts of law firms or of lawyer’s themselves. To further create this distinction, each state judiciary makes their own trust account rules to delineate the nature of this financial trust.

Each lawyer can open one client trust account per lawyer in a firm. Client’s advance fees or case deposits are not considered money a lawyer has earned. Advance fees or deposits are money set aside to cover costs of cases. Therefore, the money is not earned by the lawyer or law firm until the conclusion of the client’s legal matter.

Advance fees or case deposits must then be placed into accounts until the case is concluded or the money is used for its purpose. All legal practices that charge these fees or deposits must open a client trust account.

In some states, civil case settlements are considered applicable to trust account rules. Particularly, most states require that a lawyer fully disclose, to the client, the nature of the lawyer’s contingency fee Some state trust account rules consider client over payment of bills partially earned income.

The procedure of bill overpayment requires that any money overpaid, must go into the client trust account. The percentage of earned money can be extracted for the lawyer, and then the rest must be given back to the client. The client may also choose to leave the residual money in the account for future services.

Escrow funds may also be applicable to trust account rules. Escrow funds or other funds that are associated with personal property or real estate transactions must be deposited into trust accounts. Most other moneys associated with a government or fiduciary obligation must be set aside in the client trust account because the money is not earned by the law firm or the lawyer personally.

The practice of law in the private sector represents varying interests between private individuals and corporations. The practice of law can function in a preventative or active manner. Preventative legal services come in the form of a lawyer’s giving of legal advice. Active legal services include the drafting of contractual agreements, wills, and other legal documents. The most active form of legal services is litigation in which an attorney represents a client in court. All of these services require hours of research that could be delegated to paralegal professionals that help attorneys discover statutory and case law evidence to support a client’s interests. Paralegals play a crucial role in the practice of law because they do the bulk of a lawyer’s research. They work in a collaboration with an attorney working in a law firm or legal department of a corporation. Paralegals that work for corporate legal departments represent clients from within the corporate organization whereas law firm paralegals help attorneys represent clients that come from outside. Law, in the private sector, represents a diverse array of interests ranging from corporate transactions to criminal defense. Paralegals are equipped with research skills in either one or more aspect of the law depending on what aspect of the private sector they represent.

Legal Administrator

Legal administrators are responsible for the financial and managerial accounting of law firm staff and employees. They part accountants, part HR managers, and part business/production managers. They must have excellent communication skills and are the heart and brains of all non-attorney conduct of a law firm. They are responsible for the financial viability of a private legal organization. They must know tax laws, labor laws, and various accounting practices and concepts. Legal administrators are handsomely compensated for the multi-tasking oriented nature of the position. Aside from the lawyers, they are the most important employees of a law office.

Expenses

Private law offices are run and operated like regular businesses. They are focused on the goal of becoming profitable. Some law firms are even structured like a publicly traded corporation; however, most are private. Since profitability is a priority law offices must budget their expenses in accordance with their income. In short, they have to keep their balance sheets in the black and not the red. All office related expenses are known collectively as overhead. Overhead constitutes expenses related to staff, occupancy, reference costs, IT costs, and promotion. Expenses vary based on market influences like the price of commodities and geographic location. Expenses are crucial in determining the billing rates of legal services.

Time keeping Attorneys often charge hourly rates for their services. Lawyers spend hours doing research, spend significant time discussing the case with a client, and writing documents to courts and serving defendants. All these tasks take time and are billable accordingly. Attorneys, paralegals, and staff are each required to log in their hours working on a specific client’s case. Keeping track of time spent on a client’s case is a preoccupation of most law firms because it is one of the main sources of income for legal organizations. Before computers, attorneys were more likely to over or under bill a client.

This problem would either hurt the law office or offend the attorney; in either case, it was bad for business. Accountability, as far as time keeping goes, is better achieved with the aid of time tracking software. Computers have played a crucial role in the legal profession because all administrative jobs have been facilitated by the personal computer, leading to more competitive rates and better client satisfaction. Law offices have been better able to turn a profit with time tracking software as well. Computers are indispensable to the legal profession.

Kinds of Fees/Billings

Lawyers bill their clients either at an hourly rate or a flat rate. Lawyers charge an hourly rate ranging anywhere from $50/hr to $1,000/hr. Flat rates are not associated with time, they are more determined on what the lawyer thinks the legal services are worth. In addition to base prices, lawyers charge different fees like retainer fees and contingency fees. Retainer fees are money set aside for court costs and other legal expenses, they are called retainer fees because the initial transaction of money between a client and lawyer solidifies the temporary bond between the two parties.

Contingency fees are fees that lawyers charge based on the outcome of the case. Most often contingency fees are applicable to moneys gained from legal remedy. Most often contingency fees are based on a percentage of the total winnings. Lawyers cannot guarantee the estimated cost of a legal service because the difficulty of a case may vary and the time it takes to resolve one’s legal issue also varies. Other factors influence the price of legal services like law office overhead, prestige, and difficulty of case.

Client Trust Accounts

Client trust accounts are basically insurance accounts on money law firms have yet to earn. State statutes determine the point at which a client’s money becomes the legal possession of the law firm or the attorney. Client trust accounts are a safeguard against bank’s seizure of a fiscally insolvent law firm. It ensures that only the property and money of the law firm itself would be garnished in the event that the legal organization cannot pay off their debts, either public or private.

State judiciaries determine the rules for placing money into client trust accounts. Most states require one account per lawyer. Retainer and contingency fees must be put into client trust accounts until a certain point. Most money that goes into the client trust account is not transferred to the full possession of the lawyer or law firm until the client’s case has concluded. If a law firm over-bills a client, they are required to put the money into the client trust account until the problem was sorted out between the lawyer and the client. Most often a percentage of the over-billed money is returned to the client. Some states perceive over-billed money as partially in the possession of the law firm or lawyer.

Administrative Reports

When a paralegal is researching legal information in law libraries or legal databases, the paralegal may find important information pertaining to the aspect of a statute or case the lawyer had in mind. The paralegal is required to report his or her findings to attorney in an administrative report. Administrative reports are legal memorandums that take place during the discovery period of legal proceedings.

Discovery applies to both litigation and transactional negotiations. Legal research is required to ensure that there is either precedent or law that pertains to a given legal question. Administrative reports follow a strict format of citation and document citation. It is a formal document that is shared between the paralegal and the attorney for whom he or she works. Paralegals are trained to report back to their attorneys in ample detail the merits of the attorney’s legal hunch. The administrative report is the cornerstone of the collaborative professional relationship between paralegals and attorneys.

Client File Management

Client File management is handled by both the paralegals and legal administrative staff. This aspect of law office administration is crucial because client files contain important information with regard to a client’s case. If case files are lost, then much productive time would have been wasted. Paralegals and administrative staff devise organizational schemes that provide the optimal way of cataloging years of active and inactive cases. Paralegals are also responsible for keeping track of the clients’ contact information because lawyers often delegate the responsibility of scheduling an appointment with a client to paralegals.

Contact information is also sensitive and confidential information that should only be shared between the paralegal, the attorney representing the client, and the client. Losing client contact information can be a detriment to client’s confidence in the legal services provided at the firm. Losing important files can mean the difference between failure and success. Many law firms use computerized filing software and physical filing cabinets as a backup to ensure that all case files and contact information is accounted for.

Paralegals may work for a private law firm or a legal department in a corporation. The nature of paralegal work in a law firm is different to that of corporation. Private sector paralegals in law firms represent clients from outside the organization. Law firm clients come from the public.

They may be private individuals or individuals seeking legal services on behalf of a business or corporation. Paralegals that work for legal departments in private sector corporations represent clients from within the corporate organization. The interests paralegals represent in either case are different with regard to interests.

Paralegals working for private sector law firms represent clients that are in trouble with the law. Paralegals help research legal information with regard to active legal action. Generally, paralegals who work for law firms help their clients after the fact. Private sector legal departments in for profit corporations interpret the law in a preventative manner. Paralegals research legal information on behalf of corporate interests, not through a third party like a law firm.

Their loyalties are to the corporation, which may push attorneys and paralegals working in the private sector to push the law to its limits. Those limits may be pushed without regard to the greater good. However, it is not the duty of the paralegal to pass judgement, they must help attorneys in both administrative and research capacities, without regard to conscience. This may be a pertinent fact to consider when deciding which aspect of the private sector a paralegal wishes to serve.

Corporate paralegals conduct legal research with respect to corporate expansion either domestically or internationally. Corporate attorneys research regulations to keep companies out of trouble. The nature of the work is not strictly of a legal manner in this respect.

The researched information is then relayed to the attorney so that he or she could better advise the corporate client. The research expertise also varies much more in the employ of a corporation’s legal department.

Law firm paralegals conduct legal research to serve clients that are already in trouble. Law firms may also provide legal advice in a preventative manner but this is generally limited to a given field of law. For example, a paralegal working in collaboration with a law firm that exclusively specializes in personal injury law would only do research on personal injury law.

This means that an experienced paralegal will have to spend less time conducting research and have written legal reportsSalaries for paralegals within these two parts of the private sectors are not much different. Corporate paralegals make slightly more than law firm paralegals. Law firm paralegals’ salaries depend on the size of the law firm for which he or she works. Corporate paralegals’ salaries vary less because most corporations with its own legal departments are large multi-national corporations.

Among the paralegal’s Client file management can be a challenging administrative task given the volume of current and former clients. Paralegals in the employ of small law offices may manually alphabetize client’s files. For larger or busier law firms, paralegals may need to use client file management software because digital records are easier and cheaper to manage.

Paralegals that use software for client file management are responsible for backing up all files. Client file management systems may also involve different organizational codes that sort clients’ files and contact information by type of case, date, or name. Paralegals either collectively devise their own organizational system, based on their preference, or use the convention the head lawyer prefers.

Clients’ files are important asset to law offices because they are written records on progress of a case. They account for a client’s case history and other important information. Client file management is crucial to maintaining an efficient legal practice. Many law offices like to use both physical and digital files in concert because digital databases can easily be lost. Physical files are reliable.

Client file management may be arranged in a large filing cabinet for the entire law firm or individual filing cabinets for each lawyer. Active client files may be placed and then later transferred to the inactive or completed file. This may seem like a menial task but the information in client’s files are of a sensitive and important nature. Accounting for clients’ files is of the utmost importance in client file management.